Water agencies’ feud ramps up

SACRAMENTO  San Diego County water officials claimed Monday to have uncovered evidence of a “shadow government” that secretly controls key budget decisions for the Metropolitan Water District as part of a coordinated campaign to discredit the county water authority’s push for more independence and lower rates.

The fresh round of charges drawn from more than 500 pages of emails and other documents is the latest salvo in an intensifying feud between the San Diego County Water Authority and Metropolitan, its primary supplier.

“Major decisions at MWD have first been determined by a shadow government operating in secrecy, outside the public’s view and then rubber-stamped by a majority of MWD’s directors,” water authority board Chairman Michael Hogan said in a statement accompanying the release of the documents.

Metropolitan’s rate structure, particularly its fees to ship water through its network, will cost the region’s ratepayers $40 million more than it should this year alone, the authority contends.

The allegations were delivered at the outset of a Metropolitan committee hearing in Los Angeles on a new round of rate increases that could reach as much as 12.5 percent through 2014.

Metropolitan officials and others dismissed secrecy claims, saying the board has been transparent and open. Some maintained San Diego trying to shift costs to other agencies.

Metropolitan board members on the panel did not publicly respond to the San Diego charges.

“It’s a lot of fuss over nothing … There certainly seems to be a fair amount of paranoia,” Metropolitan General Manager Jeff Kightlinger said in a later interview.

The rate increase had its defenders, who urged Metropolitan to invest in long-term supply projects.

Ken Rausch, executive director of the El Monte Chamber of Commerce, compared investments in water projects to preventive medicine and auto repairs.

“If you don’t invest today, it will cost you dearly tomorrow,” he said.

The panel, after hearing from about 40 speakers over two hours, voted to recommend that the full board postpone action until April when it convenes Tuesday. However, the full board can override that recommendation.

A number of San Diego County water agency, city officials and community leaders testified in opposition to higher rates.

“This is not just about money. You’re talking about lives,” said Jimmy Knott, an Oceanside community activist noting that Metropolitan does not offer aid to help the poor pay their water bills.

San Diego City Councilwoman Lorie Zapf told the committee that the city has had to cut staff, pensions and spending.

“This agency should do the same,” she said of Metropolitan.

Kightlinger said the overarching dispute is not surprising given the amount of money at stake. He said many Metropolitan agencies are convinced the San Diego authority, itself a member, wants to shift about $38 million in costs associated with the transfer of Imperial Valley water to the San Diego region to other members.

The county water authority paid Metropolitan $203 million last year.

One of those drawing San Diego’s ire is the Western Municipal Water District, which serves parts of Riverside County. The district had worked with others to pay for a $50,000 study that suggests the San Diego-Imperial water transfer is too expensive when compared to buying the same amount from Metropolitan.

“We’re simply trying to understand the costs associated with the (Imperial) transfer to San Diego as it’s our responsibility to defend our customers and keep water rates as low, fair and equitable as possible,” said John Rossi, the district’s general manager.

Metropolitan is Southern California’s primary water supplier, serving about 19 million residents. The San Diego County Water Authority buys a majority of its water from Metropolitan and delivers it to a number of agencies, including the city of San Diego.

The county water authority claims that many Metropolitan agencies commanded payments from members that were then used to hire consultants and others to influence the full Metropolitan board. Taken together, the 20 agencies in this group make up a 75 percent voting bloc on the 26-member Metropolitan board. The county water authority controls just 17 percent of the vote.

The allegations imply that Metropolitan agencies in question, which described themselves in emails as a “secret society” or “anti-San Diego coalition,” control rates, steer more funding their way and undermine San Diego’s purchase of water from Imperial.

“The water authority has been demonized and blackballed” only because it sought to protect San Diego ratepayers, Hogan said in his testimony.

Dennis Cushman, county water authority assistant general manager, offered biting testimony. He told Metropolitan panelists “it was your plan all along to cook up special financial rewards for your agencies,” such as steering MWD dollars to local projects.

Kightlinger said various water agencies have routinely formed separate groups to work on issues of mutual concern. “It’s pretty common,” he said.

The county water authority is expected to introduce the new information as evidence in pending litigation against Metropolitan. The documents show that the rates were set in an “arbitrary” and “capricious” manner, which is justification to toss out the MWD policy, the county water authority said.

Metropolitan has long denied the claims, saying that deliveries to the end of the pipeline are more expensive and that the long-standing rate policy is fair.

County water authority leaders allege that the records show that the group of members was provided advance documents and other information that they then subsequently used to form positions in secret. Those positions were then voted into policy in later public meetings of the full Metropolitan board.

Top MWD administrators were in the loop and at times participated in providing information, the county water authority claims.

Their meetings were not disclosed and members created private email accounts and a secure website to prevent scrutiny, according to San Diego officials.

The group also paid consultants, both former MWD executives, a combined $15,000 to develop policies that were then lobbied before the full board, the authority contends. One of them, Ron Gastelum, declined to comment when reached by email.

The hundreds of pages of emails, correspondence and other material were obtained through Public Records Act requests filed by the county water authority as part of the litigation.